April 24th, 2010 by Alex

A lot of people wish they had put all their money into the stock market in March of 2009, but if they were really the type of people with the guts to do that they would have already had all their money in the market well before the bottom.

The broad money supply (M3) is now not growing, but actually contracting. And M2 money supply is at least nearly contracting. That is not conducive to a growing economy. All it is conducive to is money floating around looking for a place to go. The only thing really growing is government and the government can’t grow without taking resources away from the private sector. And unless the private sector is prospering, there is nothing to fund the government except for borrowing and printing money. The problem with government printing money doesn’t really show up in full form unless that money is expanded by the banking system through increased demand to borrow and confidence to lend. Increased demand for borrowing and confidence to lend requires a positive economic outlook. So, from a money supply stand point, unless the economy really heats up and everyone becomes positive, I don’t see any really big inflation coming anytime soon due to money supply growth. I only see big inflation if people start bailing on the dollar.

In the near future, regardless of what the official numbers say, if the economy is weak it will be reflected in the economic health of states (since states don’t print their own money, except North Dakota). If states are in trouble, then the federal government will need to print money to bail them out. The imbalance between growth of government and lack of growth in the real economy is where the inflation danger rests. That is where we will see an inflationary depression scenario: rising prices without real economic growth and real wealth creation.

I don’t make short-term forecasts because I have no idea about things in the short-term. For instance, a rogue event like a big terrorist attack could mess up even the best forecast short-term. All I know is that long term, if you put your money in something like the Dow Jones Industrials for the next 40 years, you’ll average about 5% gain per year plus whatever dividends you get (probably no more than 3%). That might meet or beat the inflation rate, or it might not. And you might be down as much as 50% at some point between now and then if you start that strategy right now. Unless we learn how to manufacture gold in the next 40 years, I think gold is just as good as and probably better than most stocks. If we do learn to manufacture gold, then we’ll be well on our way to a post-economics world, so investing won’t matter much. Because the less scarcity there is, the less need for economic activity there is. In a world without scarcity there is no need for an economy. The basic formula of economics is: put as little as possible in to get as much as possible out. If economics is allowed to work to its conclusion, in the future, we’ll all live like royalty on a few minutes of work per day–especially if we start spending most of our time in evermore immersive virtual realities.

But anyway, for now, the bail out bubble rolls on, but I personally have no confidence in where it is rolling to.

April 24th, 2010 by Alex

The part of this clip I liked the best is were Ron Paul points out how people like Matthews are inconsistent in their support of liberties and social justice.

April 16th, 2010 by Alex

March 19th, 2010 by Alex

A six part series done with Drew Carey looking at free-market solutions for fixing the city of Cleveland.

March 17th, 2010 by Alex

The thing I found particularly interesting about this interview is that Ron Paul brings up the idea that the Federal Reserve may be lending foreigners money to buy treasuries, giving the dollar the illusion of support.

February 6th, 2010 by Alex

A good and long talk given by Peter Schiff at Yale.

February 6th, 2010 by Alex

The headline January jobs number reported that unemployment dropped to 9.7%. But if you take out seasonal statistical adjustments, it rose to 10.6%. Sometimes the seasonal adjustments make the number higher, sometimes lower. Net job losses increased from 14.7 million in December to 16.1 million in January due to a downward revision to previous reports. The number of discouraged workers who dropped out of the stats also rose, passing the 1 million mark. If those people were included the rate would have risen to 11.2% seasonally unadjusted. Also, seasonally unadjusted, the total unemployment number including underemployed and discouraged reached 18%. Basically, the only people hiring are health care and the federal government; two sectors that drain wealth instead of create it. So, that is the real story behind the January jobs numbers. And how real and reliable those numbers are to begin with is itself questionable.